Ms. Ibukunoluwa Odegbaike is the Managing Director of Guaranty Trust Bank, East Africa. Ms. Odegbaike has over 19 years banking experience spanning operations and sales and marketing.

Ms. Odegbaike is involved in the overall management of the bank’s day-to-day operations.

Before her appointment to her current role, Ms. Ibukunoluwa held various positions at Guaranty Trust Bank Plc, Nigeria. She joined the Bank in 1996 as an officer in Transactional Services Group of the Bank. Subsequently, she headed the Bank’s Private Banking Group in charge of portfolio management of the high net worth individuals of the Bank.

Before joining Guaranty Trust Bank (Kenya) Limited, she was the Head of Retail Banking, in charge of developing, executing and managing both the financial inclusion and retail strategy and tactical business plan of the Bank. This includes target market selection, customer and product propositions within the broad framework of the Bank’s strategy.

She holds a Bachelor of Science degree in Biology from University of Lagos, Nigeria and has attended several senior management courses including the INSEAD high performance management programme and Cranfield executive leadership programme.

Ladies and gentlemen thank you all for joining. Allow me to welcome Mr. Lamin Manjang CEO, Standard Chartered Bank Kenya. We look forward to his insights on the topic of Retail/Household Access to Credit

Lamin Manjang

Good morning to all online users and the general public...im happy to have this opportunity to talk about a very topical issue, which is interest rates and access to credit in Kenya.

maurice monyi

hey guys am glad to join this chat

Simon Lee

Thanks Admin. Looking forward to the chat on Retail and Household access to Credit. Major talking point I would imagine.

Lamin Manjang

Judith thanks for getting us started...I see your question about access to credit for the informal sector...Im glad to say that the lending to the household sector is about 26 per cent in Kenya...and this is actually high, it means that banks are providing credit to that sector. Of course the informal sector has certain challenges which create difficulty for banks to provide credit to that sector. One of the challenges faced by commercial banks in informal sector is the lack of information to be able to assess the credit needs of the client; therefore there is a need for multiple channels of intervention to support the informal sector...such as government programs as well as channels such as SACCOs and MFIs (micro finance).

Lamin Manjang

Hi Simon, Maurice...welcome to the Chat

Austin Waga

Morning,

Austin Waga

Wha is your view on KBRR projections towards the second half of the year

Austin Waga

and its impact on lending rates

maurice monyi

thanks lamin manjang

Lamin Manjang

As you share your thoughts and questions. Maybe I can say that banks in Kenya are keen to support the growth of the private sector, because we realise that is the engine of economic growth. And so far we have seen private sector credit growth has averaged over 22 percent in 2014 overall (including lending to households).

Lamin Manjang

Thank you Austin for the question on KBRR...

maurice ndege

morning sir

Lamin Manjang

....with the recent revision of the Central Bank Rate / CBR by the Central Bank, following concerns around the outlook for inflation and the exchange rate; the central bank revised the CBR from 8.5 pct to 10 pct. So we expect with the next cycle of the review of the Kenya Banks Reference Rate / KBRR, banks would reflect this increase in their lending rates.

Alex Mugo

Morning All

Lamin Manjang

The introduction of KBRR last year was designed to bring transparency in the pricing of loans. Before that, banks were pricing of their Base Rate, which was specific to individual banks. KBRR has allowed a uniform pricing formula and banks then would put a margin on top of that to reflect their cost of funds; operating costs; and profit margin. And we have seen since the introduction of KBRR, a continued gradual reduction in average lending rates.

Alex Mugo

My be i can start my questions by asking the scope of this so called HOUSEHOLD SECTOR

maurice ndege

the biggest challenge with informal sector lending is lack of information and to cub this there is introduction of CREDIT RATING by one of the CRBs and it has seen the SMEs accessing credit.Can this be the bridge to the gap between SMES and lenders

Maurice, I think that credit reference bureaus have provided an opportunity for banks to assess the credit risk of various borrowers. When the credit information sharing framework was introduced by KBA and CBK, banks were sharing negative information about defaulters. Now we are now sharing positive information sharing where we can have a complete profile of borrowers and therefore this would enable banks now to segment borrowers and offer much more competitive terms to those good borrowers.

STEPHEN NJUGUNA

I recently learnt that a third credit reference bureau was licensed by CBK..CreditInfo. Is there a need for having mutiple bureaus

Lamin Manjang

Regarding enterprises/SMEs in the informal sector and credit ratings, because they are not part of the formal commercial banking sector, their data is not in the CIS framework. But with SACCOs and MFIs joining the CIS framework, we hope this issue will be resolved.

Lamin Manjang

Stephen thanks. I think the more credit reference bureaus in the market, the more non banking institutions (telcos, utilities, etc) will share the information with those bureaus. And therefore lenders would have a more comprehensive profile of borrowers.

maurice ndege

It is notable that SACCOs and MFIs are already joining the bureau platform which will help in enriching the CIS mechanism

Lamin Manjang

Yes indeed Maurice. It is a positive development which is welcomed in the market.

Judy Kerubo

Why do Banks increase their rates when the KBRR increases but do not decrease the rates when the KBRR decreases?

Judy Kerubo

Isn't this double standards?

maurice ndege

We also need to educate the people on the bureau benefits because if one is black listed in the bureau they are never aware of how to rebuild themselves especially now with Mobiloans most of them are finding it hard to redeem their creditworthiness

Lamin Manjang

Thanks Judy...banks do actually respond to movements in the KBRR. When the KBRR was reduced in January of this year, banks repriced their lending book to reflect the reduction in the KBRR.

Alex Mugo

Are the rules/guidelines for consumer protection when it comes to credits/loan? most banks have strict rules to protect themselves and consumer may be left unprotected.

Tina Mutisya

What initiatives are banks working on to address high rates?

Lamin Manjang

Judy, I would add that banks are required to provide adequate notice to clients (30 days) before a change in interest rates is implemented for variable interest rates.

STEPHEN NJUGUNA

Thanks Lamin. My thinking is, the information would be rich if centralized unlike when fragmented by having multiple bureaus

Lamin Manjang

Maurice I see your question about rehabilitating ones credit standing after default.

Judy Kerubo

I agree with Titus. High loan rates make the loans inaccessible to those in the informal sector. Standard Chartered is currently at approximately 18%. If you increase the rates, won't they be overly expensive?

Lamin Manjang

...after a default, once a customer has paid off the debt, and there is no other new default, the credit profile of that customer would improve and they are more likely to get access to credit.

Lamin Manjang

It is advisable for customers to check with the credit reference bureau to get a copy of their credit report. With the regulations, you are entitled to a free report so one can take proactive action to check their credit rating and improve their credit profile if they need to. For instance, there might be a case of wrong or old information that needs to be corrected or updated.

Maurice Abongo

how do you do your credit rating to first time borrowers especially those new clients who dont have credit history from other financial institutions. do you do psychometric test in your bank for first timers in credit lending?

maurice ndege

Its good to note that you are entittled to one free credit report every year so as to see the information the bureau holds about you Metropol CRB is currently running a campaign on media and it has really created awareness

Lamin Manjang

Alex there are consumer protection guidelines designed to specifically protect customers in their dealings with product and service providers, including banks. Banks are required to be transparent and fair in all their dealings with their clients. And there is a recourse for clients to take up any unfair treatment with the regulator/CBK, industry association/KBA, alternative dispute resolution, and finally legal redress.

Joel Gatama

Does Standard Chartered offer Retail/ Household lending?

Abu Salim

on the interest rates, do you agree the spread by banks is the main contributor to the pricing of loans? the banks average of 9% or so is high.

Lamin Manjang

Stephen, banks are required to send the same information to the 3 bureau simultaneously so the database is the same across the 3 bureaus.

Lamin Manjang

Yes Joel, we do offer retail and household lending. Visit www.sc.com/ke for more information.

Alex Mugo

Which factors are considered while coming up with the lending rates? I know of some countries that has lower rates and others higher compared to Kenya.

Tolbert Wabunoha

Mr. Lamin are household incomes appraised before loans/credit for the same is disbursed or it will depend on collateral. In my view households are just another part of the consumption cycle.

Lamin Manjang

Abu. Welcome to the Chat. The issue about spreads has actually been addressed by banks and we have seen the spread narrow from double digits to 9 percent, with the expectation it will continue to narrow. Also with the introduction of KBRR there has been greater transparency and we expect the spreads to narrow further due to the increased competition for deposits.

Pat Wanjau

I'll ask this one here since I don't know where else to. Why is the Standard Chartered Bank, Thika Road Mall branch, not listed in the KBA list? Is this list ever updated?

Lamin Manjang

To answer points raised by Tina, Judy and Alex about high interest rates and what the industry is doing....

STEPHEN NJUGUNA

What's your take on the recent publication of the rates by CBK on the interest rates by different Banks. Is it like likely to influence customer decisions

STEPHEN NJUGUNA

What's your take on the recent publication of the interest rates by CBK charged by different Banks. Is it like likely to influence customer decisions

ANN KAMAU

what will be the role of the Competition authority of Kenya(CAK) regarding loans pricing

Lamin Manjang

....the banking industry together with the CBK and the National Treasury worked to come up with the KBRR framework to bring greater transparency into the pricing of bank loans. And since the introduction of KBRR, we have seen a gradual reduction in lending rates and a reduction in spreads. However, there are other factors that affect the cost of credit. Such as; high cost of operations; the delays and cost of registration of property; the cost of litigation for non performing loans; the other third party costs such as insurance and property valuation. So other costs are there and therefore there must be a comprehensive effort by all stakeholders to bring down the cost of credit in the market.

Lamin Manjang

The other intervention the industry has initiated was the introduction of credit information sharing. Although it started with negative data, we have now migrated to positive information sharing which will bring segmentation and the ability to offer more competitive rates to borrowers with a good credit profile.

David Kimwele

Hello. Unfortunately, the chat room is not mobile friendly. I could have participated more full.

Abu Salim

thank you, are the banks proposing some of the changes?

Tolbert Wabunoha

Bringing down the cost of credit is another long story Boss Lamin. It will be a long term process that will spice up competition in the industry.

Abu Salim

If what you mention above has effects on the business, banks would show this in the financials. Contrary, we see banks post very high profits and is evident from the spread.

Lamin Manjang

Hi Tolbert...thanks for the question...when we give personal instalment loans, they are typically unsecured and based on the salary/other income of the individual. So in this case banks do not take any collateral. However, when banks offer mortgages and auto loans, they do then take collateral for those facilities.

maurice ndege

KBA is also working hard to create awareness on TCC (total cost of credit) and also has an app that has the APR calculator just to help borrowers compare the lenders and also offer platform for choice

STEPHEN NJUGUNA

Mr. Lamin, Do you think there are chances of Banks with holding the positive information for fear of competition. i.e. competitor using the same to offer better terms

Lamin Manjang

Pat thank you for banking with Standard Chartered. We have taken note of your feedback and will inform KBA.

Tolbert Wabunoha

Abu thats correct. The other hidden factor is that bank managers may be under immense pressure to make more money for the sahreholders this is never told to the public. We need some clean deals.

Tolbert Wabunoha

Thanks Lamin for the household credit info. I'm going to run one deal with SC/ug.....

Chat Admin

David, thanks for your feedback. Your concerns have been noted.

Lamin Manjang

Ann, regarding the Competition Authority's Role and loan pricing. I would say that the banking industry strives to operate in a competitive and transparent manner. A recent study by KBA and Deloitte confirms that indeed there is adequate competition in the banking industry in Kenya.

Lamin Manjang

Tolbert thanks for your sentiments. I would like to highlight that average lending rates in this market have reduced from a high of 22 percent in 2012 down to 15.5pct by Q1/2015. This is a trend in the right direction in terms of cost of credit coming down in Kenya.

Oduor Ambrose

Thanks Mr. Lamin We have always interacted while you were in Uganda and I realy appreciate the efforts you have always put in banking sector Kudos.

Lamin Manjang

Stephen...regarding positive information sharing, this is a level playing field where banks are required by the regulator to share all customer data to the licensed bureaus.

Absalom Odiyo

what does the future hold for someone wirth 15,000 a month in Asset Financing? can that guy really finance a house, with the rates! never

Chat Admin

We are about to wrap up the session. We wrap up in 5 minutes

Lamin Manjang

Thank you Oduor. Thanks for joining us. We look forward to partnering with all our clients and stakeholders to contribute to the development of the banking sector and overall development of the economy.

Lamin Manjang

Maurice, lack of a credit history does not disqualify you from getting your first loan.

Lamin Manjang

Thanks maurice for sharing

Pat Wanjau

Thank you Lamin. I hope this list is updated as I'm being inconvenienced by some institutions, namely CDSC Kenya. They do reference the list while updating the list of NSE investor details.

Oduor Ambrose

My Dilema is sometimes i operate a small business whose mark up is 25% what would be your sober advice on me in such a case?

maurice ndege

#ADMIN as just a suggestion we need to invite one of the bureaus officials to the chat so as to have them enlighten us on the bureau information and regulations.Lamin have a great day and thanks for your insights.

Alex Mugo

Mr Lamin. Thanks a lot, we are now more enlightened.

STEPHEN NJUGUNA

Thank you for your time Mr. Lamin

Lamin Manjang

Abu, thanks for your comment about banks profits. Generally it is a positive thing if banks are making profits because it is reflective of a vibrant and resilient private sector. A "sick" banking sector is actually disastrous for an economy. Banks contribute in terms of taxes, facilitating the growth of the economy, employment creation, and financial deepening and integration. All of these are possible only if you have a healthy, profitable and growing banking sector.

Lamin Manjang

As I wrap up. I would like to thank everybody for their participation in the CEO Chat forum. As the KBA, the banking industry is very keen to ensure that we support our clients by providing them with appropriate products and services and helping them to grow in terms of their individual and business capacities, so we can all contribute to the development of this great country.

Lamin Manjang

Thank you all. Good bye. And have a good day.

Chat Admin

Ladies and gentlemen, allow me to take this opportunity to thank Mr. Lamin Manjang for being with us today and for his insights.

Chat Admin

We would also like to thank you all so much for your questions and comments that have made this session interactive and a great success.

Alex Mugo

Thank you @Admin

Jacob Owade

I enjoyed watching and learning from the session. Thank you

Chat Admin

Thank you all for your participation. We look forward to meeting here again next Wednesday 24th June. The topic will be Microfinance Lending & Accessibility. We look forward to your participation. Many thanks and have a wonderful day.

Abu Salim

thank you.

Oduor Ambrose

Thanks for the Informative session

Chat Admin

Glad to know that Jacob.

STEPHEN NJUGUNA

Thanks for the information. You could consider adding more time..

Chat Admin

Remember you can access the transcripts and podcasts of past chat sessions on the archives section of chat.kba.co.ke

Chat Admin

Alright everyone, have a lovely day. Meet here again next Wednesday 24th June at 9am

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